Multi Tenant Strip Malls (Retail) Owner Financing Deal Thoughts

[Oliver Trojahn]

I have been discussing possible opportunities with a retiring commercial real estate investor and developer in the Kansas City, MO area.  He now lives out of state.  I have met with him four times to go over the deals and opportunities with him.  He owns his properties free and clear and wants to sell them to me on an owner financed note to avoid a huge tax hit.  Here is what a typical deal would look like:

25 years at WSJ rate +2% (Currently 5.25%)

i need about 200k ish to put down on each.  comes out to about 15% down.

Each property is in a very good location, retail, all rented, and cash-flowing with long term leases. All triple net leases.  Rent increases are at about 6% a year.

Net Income on the first one I would buy is 110k, he will sell at around a 7 cap.  In one year the net income (with rent increases) jumps to 130k, then about 6% a year after that. 

This same guy has also been mentoring me about commercial real estate.  I own 10 rental houses so haven't dived into commercial yet.  I feel like this is an opportunity that I shouldn't pass up. 

I could end buying quite a few properties from him this way.  These propertis are all in A and B locations in KC.

I am curious to here everyone's thought on these deals.  I am excited but also don't want to get burned.  I know the seller well and trust him.